Freelance work remains an important part of the US economy


2 million more Americans joined the ranks of freelancers in the last 12 months, according to a new study from Upwork. The pandemic caused a pause for some.

Image: Upwork

Some 59 million Americans performed freelance work in the past 12 months, representing 36% of the U.S. workforce—an increase of 2 million freelancers since 2019, according to a new study by Upwork.

This increase was fueled in part by an influx of younger, highly skilled professionals seeking flexible alternatives to traditional employment, the “Freelance Forward: 2020” study of the US independent workforce found.

Even amid the COVID-19 pandemic, freelancers contributed $1.2 trillion to the economy in annual earnings–up 22% since 2019, according to the study of more than 6,000 US workers over the age of 18.

SEE: How the gig economy is reshaping the IT enterprise (TechRepublic)

The key findings:

  • More professionals are freelancing full time: The share of independent professionals who earn a living freelancing full time has increased 8 percentage points to 36% since 2019. 

  • Freelancing increases earning potential: Of those who quit their full-time job to freelance, 75% say they earn the same or more in pay than when they had a traditional employer.

  • Young adults are turning to freelancing for economic opportunity: Amid a tough job market for recent college graduates, half of the Gen Z workforce (ages 18-22) have freelanced in the past year, and of those, more than a third (36%) started since the onset of COVID-19.

  • Freelancers are increasingly highly skilled: 50% of freelancers provide skilled services such as computer programming, marketing, IT, and business consulting, up from 45% in 2019. 

  • Professionals are likely to consider freelance work in the future: 58% of non-freelancers who are new to remote work due to the pandemic are now considering freelancing in the future.

“It’s no surprise that freelancing is on the rise, especially now that we have fully disentangled ‘where’ we work from ‘what’ we work on,” said Hayden Brown, president and CEO of Upwork, in a statement. “The data shows that independent professionals are benefiting from income diversification, schedule flexibility, and increased productivity.”

On the employer side, companies are finding that these professionals can quickly inject new skills and capabilities into an organization and strategically flex capacity up and down along with changes in demand and workloads, Brown said.

“We expect this trend to continue as companies increasingly rely on freelancers as essential contributors to their own operations,” she said.

Many professionals entered the freelance workforce for the first time to adapt to the changes and uncertainty of COVID-19, said Adam Ozimek, chief economist at Upwork.

“At the same time, the shift towards greater workforce flexibility coupled with the necessity to maintain continuity brought new demand for independent professionals from businesses,” said Ozimek, in a statement. “The changing dynamics to the workforce that have occurred during the crisis demonstrate the value that freelancing provides to both businesses and workers.”

Freelancing increases opportunities

Respondents ages 55+ said freelancing helps to address financial needs as they grow older, while 65% of boomers who freelance said that independent work is a good way to transition into retirement.

 Among the 48% of freelancers who are caregivers, more than two-thirds said that freelancing provides them an alternative that can allow one to support a family without a traditional job.

The state of the freelance workforce

The study also found that:

  • The composition of the freelance workforce is getting younger: 50% of Gen Z workers (age 18-22), 44% of millennials (age 23-38), 30% of Gen X (age 39-54), and 26% of boomers (age 55+) freelanced.

  • 58% of freelancers have had more than five clients in the past six months, up 3 percentage points from 2019.

The changing freelance workforce due to COVID-19

Despite the overall increase in freelancing, COVID-19 has impacted all areas of the economy and as result, 10% of the US workforce has paused freelancing. These freelancers were typically working in occupations most impacted by social distancing and were in non remote working situations. Of those that paused, 88% said they are likely to return to freelancing in the future.

On the other hand, 12% of the US workforce began freelancing during the pandemic for the first time. Of those who started:

o    48% already see it as both a full time and long-term career opportunity

o    60% said that there is no amount of money that would convince them to take a traditional job.

Further, 67% of full-time freelancers said freelancing has prepared them to cope with the uncertainty of the coronavirus pandemic better than those in traditional jobs.

Work hours have either stayed the same or increased since the pandemic hit for 65% of skilled freelancer respondents. 

Freelancers’ perspectives on skills and training

  • 59% of freelancers have participated in skills training in the last six months vs. 36% of salaried workers.

  • 54% of freelancers said soft skills like communication and people skills are very important to their work.

  • Although 81% of freelancers said their college education is useful to the work they do now, of those with a four-year college education, 65% said they wish they had instead obtained a two-year degree and supplemented their education with online training.

The future of freelancing

Non-freelancers new to remote work said they are considering freelancing in the future because it has made them a more productive worker (73%). Respondents also said  they’d prefer working remotely over returning to a traditional office (74%); and to earn extra income to cope with the impact of the pandemic on their personal finances (85%).

There was a lot of optimism expressed: 86% of freelancers said that the best days are ahead for freelancing, while 71% of freelancers said perceptions of freelancing as a career are becoming more positive.

Expect to see more young adults freelancing for economic opportunity. Amid a tough job market for recent college graduates, half of the Gen Z workforce (ages 18-22) have freelanced in the past year, and of those, more than a third (36%) started since the onset of COVID-19.

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